In this video I want to explain the pros and cons of having an unfurnished rental vs a furnished rental.
When you are in the process of moving and you consider just leaving everything behind since you just don’t know what to do with your furniture after you finally decide that you want to rent your home, whether it’s because you don’t want to have to deal with moving everything into a storage or it will cost too much to ship it to wherever you are moving to, or if you are in a life transition and maybe just got married, consider the following:
1. Furnished rentals pros: They attract short term renters. Short term rental can be anywhere between 1-6 months. You are able to make more income on a monthly basis since your asking price can be set higher because it is a furnished home. Furnished rentals also allow the landlord/investor more flexibility with short-term goals that they may have. By not locking yourself into a long-term lease your options will be a lot more flexible since you do not have a long-term lease.
2. Furnished rental cons: Furnished rentals can be expensive. You will have more costs associated with a furnished rental because of a number of factors including:
- Turn over costs: each time a tenant moves in or out of the property you can expect to pay for things such as professional home cleaning, carpet cleaning, handyman costs for paint touch-ups, appliance repairs, landscaping, tenant placement services to help you find a tenant each time.
- Inconsistency with rental income: when you are renting short term you have a much higher turn over volume in tenancy which leaves you at risk for long-term tenancy. Renting a furnished home is already a small enough market, then wanting to be able to get someone in there before the next mortgage payment is due can be very challenging.
3: Unfurnished rentals pros:
- You have a clear idea of what to expect. You sign a 2-year lease with a qualified renter you should be expecting the next 2 years or mortgage payments to be covered. You are really minimizing your risk of not being able to pay the mortgage payments.
- You are catering to a much larger market, unfurnished homes is the best way to get a long-term tenant. Many reason go into why I say that, a few are, the tenant just got a job nearby and wants to not have a long commute OR The tenants kids are in the school district and want to make sure the kids are able to stay in a specific school until they complete their enrollment OR the tenants just really like the neighbourhood and just aren’t able to purchase for a couple of years due to saving for a down payment, interest rates being too high, paying off debt.
4. Unfurnished cons: There isn’t too may but issues that I run into at times are:
- Wanting to sell the house - by having your home leased long term, it makes selling your home a bit difficult by adding an extra hurdle, that being that a tenant has a long-term lease with you. (But even then, the real estate market doesn’t change overnight, you will most likely be able to take advantage of market trends once your lease is up.)
- Unexpectedly needing to move back into the house. Life happens! You just never know what will happen tomorrow. If you need to move back into the house you will need to make sure to provide a clause that would allow you to return before the lease term ends.
If you are still wondering which option would be a good idea for you, feel free to contact me and we can go over your options and figure it out together.
To see some of our #RentalsInHouston, visit http://www.houstonpropertymanager.com. Call us or visit us today at:
Flat Fee Landlord Houston
13201 Northwest Fwy Suite 777
Houston, TX 77040